Anugrah Musthofa S.

B
23/516764/EK/24500
THE IMPACT OF THE UNCONDITIONAL CASH TRANSFER PROGRAM
(BLT) ON CIGARETTE CONSUMPTION IN INDONESIAN SOCIETY
ORIGINAL ABSTRACT
Introduction/Main Objective: One of the purposes of the unconditional cash transfer
program (Bantuan Langsung Tunai/BLT) was to help the poor and near-poor households to fulfil their
basic needs. This study attempted to identify the impact of the BLT on cigarette consumption in
society; as it is well known that smoking has more disadvantages than benefits. Research Methods:
The study used data from the Indonesian Family Life Survey (IFLS) 2000 and 2007 to capture the
impact of the BLT on the cigarette consumption of households. Results: By controlling for the
characteristics of the respondents, and using the fixed effect at household and village level as an
estimation technique, the empirical results showed that in general there was a changing pattern of
cigarette consumption in Indonesian society, to which the BLT program has contributed. Conclusion:
By influencing the savings of households, the BLT program has significantly decreased cigarette
consumption in Indonesia. It could be explained by the permanent income hypothesis, where the BLT
transfer can be categorized as a transitory income in that hypothesis. This study can be an input and
consideration for the transfer policy’s implementation in Indonesia in particular.
Keywords: Permanent income hypothesis, transitory income, cigarettes, Bantuan Langsung Tunai
(BLT)
REVISED ABSTRACT
Introduction: Unconditional cash transfer program (Bantuan Langsung Tunai) is a
government program that provides cash handouts to poor and vulnerable households in Indonesia. The
program aims to help these households meet their basic needs, such as food, clothing, and shelter.
Objective: The aim of this study to determine the effect of the BLT program on cigarette consumption
in society, given that smoking's drawbacks outweigh its advantages. Research Methods: This study
utilized data from the Indonesian Family Life Survey (IFLS) 2000 and 2007, employing a fixed-
effects model to account for unobserved household and village-level differences. Findings: The
findings revealed a significant negative association between the BLT program and cigarette
consumption, and the effect of the BLT program was larger for households with lower incomes.
Conclusion: BLT program seems to be a wise policy because it was proven that BLT program might
have positive effect in reducing household cigarettes consumption. These findings align with the
permanent income hypothesis, which suggests that individuals tend to utilize unexpected income more
judiciously compared to regular income. This suggests that people may have used the money to invest
in their future. Implication: These results suggest that the BLT program serves as an effective tool for
reducing cigarette consumption in Indonesia.
Keywords: Permanent income hypothesis, transitory income, cigarettes, Bantuan Langsung Tunai
(BLT)